Aggregated Financial Statements and Audit Requirements for UAE Tax Groups

A practical reading of the Corporate Tax Publications

When two or more taxable persons in the UAE decide to form a Tax Group under Article 40 of the Corporate Tax Law, the Federal Tax Authority does not simply ask the parent company to hand over its existing consolidated accounts and treat the job as done. It asks for something more specific: a set of Aggregated Financial Statements, built for a single purpose, which is arriving at the Tax Group's taxable income. The Corporate Tax Publications, issued by the FTA on 27 August 2025, set out how that exercise is meant to work and when an audit of those statements becomes mandatory.

For finance and tax teams supporting a UAE Tax Group, this is not a piece of guidance to skim once and file away. It shapes the mechanics of every consolidated Corporate Tax return the group will ever submit, and it introduces a framework that, while it borrows heavily from IFRS, is deliberately not the same as the consolidated financial statements a group may already be producing for shareholders. Understanding where the two frameworks diverge, and why, is the difference between a smooth filing and a set of numbers that do not reconcile when the FTA asks questions.

This article walks through what the Corporate Tax Publications actually require, why the aggregation exercise is built the way it is, and where finance teams most commonly run into trouble.

***At a glance** - Governing publication: FTA Corporate Tax Publications, issued 27 August 2025 - Aggregated Financial Statements required: For all Tax Periods commencing on or after 1 June 2023 - Audit required for every Tax Group: For Tax Periods commencing on or after 1 January 2025 - Filing deadline for audited statements: Within 9 months of the end of the relevant Tax Period - Presentation currency: United Arab Emirates Dirham (AED)"

A quick refresher on what a Tax Group is

A Tax Group is two or more taxable persons that are treated as a single taxable person, provided an application has been made to the Authority and approved. The conditions for forming one sit in Article 40 of the Corporate Tax Law, and they are fairly demanding. The parent company must own at least ninety five percent of the share capital of each subsidiary, hold at least ninety five percent of the voting rights, and be entitled to at least ninety five percent of the profits and net assets, whether directly or indirectly. Neither the parent nor the subsidiary can be an exempt person or a qualifying free zone person, both must have the same financial year, and both must prepare their financial statements using the same accounting standards.

Once the FTA approves the application, the Tax Group becomes the taxable person for Corporate Tax purposes. The parent company takes on the compliance obligations set out in the relevant chapters of the Corporate Tax Law on behalf of the whole group, but every member remains jointly and severally liable for the Corporate Tax payable while it belongs to the group. That joint liability matters later in this article, because it explains why the Authority cares so much about how transactions and balances are tracked even after a member leaves.

Article 40 conditions to form a Tax Group

Why Aggregated Financial Statements exist at all

A group that already prepares consolidated financial statements under IFRS might reasonably ask why it needs a second set of numbers just for tax. The answer is that consolidated financial statements are built to serve shareholders and other stakeholders under a control-based model, complete with business combination accounting, goodwill, and fair value adjustments arising from acquisitions. None of that machinery is designed with taxable income in mind.

The starting point for Corporate Tax purposes is therefore not the consolidated financial statements at all. It is the annual standalone, or unconsolidated, financial statements of each member of the Tax Group. Those standalone statements still need to be prepared under IFRS, or IFRS for small and medium sized entities where relevant, but the Aggregated Financial Statements built from them follow a special purpose framework that departs from certain IFRS standards on purpose. Outside those specific departures, the Aggregated Financial Statements are expected to comply with IFRS, and the primary statements required are an aggregated statement of financial position, an aggregated statement of profit or loss, an aggregated statement of other comprehensive income, and an aggregated statement of changes in equity.

***Key point** Aggregated Financial Statements are not a rebadged version of the group's IFRS consolidated accounts. They start from each member's standalone financial statements and are built specifically to arrive at the Tax Group's taxable income, which is why the two sets of numbers can, and often do, look different."

How the aggregation works

At its core, the process is a line-by-line aggregation of the standalone financial statements of every member of the Tax Group, with transactions between members eliminated. That covers transactions between the parent and each subsidiary, as well as transactions between two or more subsidiaries that both sit inside the same Tax Group. Eliminations are not limited to the transaction itself. They also extend to valuation adjustments and provisions relating to intragroup transactions, and to any change in the accounting value of assets and liabilities that arose because of a gain or loss on a transaction that has since been eliminated.

There is one important carve out. Where a member recognised a deductible loss in a Tax Period before it joined the group, in respect of a transaction with what later became a fellow group member, that transaction is not eliminated until the deductible loss has been fully reversed. If it is not eliminated, the related income has to be brought back into the Tax Group's taxable income in the period it arises, capped at the amount of the loss that was deducted before the group was formed. The Corporate Tax Publications illustrate this with a scenario in which one company impairs a loan owed by another before they form a group, and the loan transaction stays outside the aggregation until the impairment is reversed to the same extent.

It is also worth being clear about what does not get pulled into the exercise. Transactions with entities that sit outside the Tax Group, even if they remain within the scope of consolidation under IFRS 10, are not eliminated for Aggregated Financial Statements purposes, and the standalone financial statements of those entities are never aggregated with the group's numbers in the first place.

Where the rules deliberately break from IFRS

The Corporate Tax Publications set out a series of specific requirements that must be followed when preparing Aggregated Financial Statements, and several of them are direct departures from how a group would normally consolidate under IFRS. The table below summarises these requirements.

Requirements for Aggregated Financial Statements

Beyond these requirements, the Aggregated Financial Statements must present comparative information for the preceding Tax Period for every amount reported, with the obvious exception of the first Tax Period in which the group exists. Disclosure requirements are also specific: the statements need to describe the special purpose framework under which they were prepared, the basis of aggregation, including the entities involved and the parent's ownership, voting, and profit entitlement percentages, the material accounting policies, estimates, and judgments applied, and explanatory notes sufficient to support the figures presented, in line with IAS 1.

Does your Tax Group need an audit

Whether an audit is required depends on Article 54(2) of the Corporate Tax Law, read together with Ministerial Decision No. 82 of 2023 and Ministerial Decision No. 84 of 2025. Under the earlier decision, a Tax Group had to prepare and maintain audited financial statements where its consolidated revenue exceeded AED 50 million in the relevant Tax Period, and that threshold continues to apply to Tax Periods that commenced before 1 January 2025.

Ministerial Decision No. 84 of 2025 changes the picture considerably. For Tax Periods commencing on or after 1 January 2025, every Tax Group, regardless of revenue, is required to prepare and maintain audited special purpose financial statements. In other words, the revenue threshold effectively disappears going forward, and audit becomes the default expectation for any group filing as a single taxable person.

Audit obligation, before and after 1 January 2025

One point that is easy to miss is that this obligation sits with the Tax Group's Aggregated Financial Statements, not with each member individually. Members of a Tax Group are not required to maintain audited standalone financial statements for Corporate Tax purposes, even where an individual member's revenue exceeds AED 50 million, and that applies across all Tax Periods from 1 June 2023 onward. The audit obligation is about the group's combined position, not each entity in isolation.

Where an audit is required, it has to be a special purpose audit carried out in accordance with the relevant International Standards on Auditing, and the audited Aggregated Financial Statements must be submitted to the FTA at the time of filing the Tax Return, within nine months of the end of the relevant Tax Period unless the Authority specifies otherwise. The Corporate Tax Publications even include, as an annex, an illustrative auditor's report and a suggested basis of preparation note, both of which make clear that the report is restricted to the management of the relevant entities and the FTA, and that the statements are not intended for any other purpose or audience.

What happens when a member leaves the Tax Group

A Tax Group is rarely a permanent arrangement. Subsidiaries get sold, restructured, or simply drop out of the ninety five percent thresholds, and the Corporate Tax Publications are careful to explain what happens to the numbers when that occurs.

Where a subsidiary leaves the Tax Group, or the group ceases to exist altogether, the departing subsidiary, or the former parent if the whole structure unwinds, must prepare its standalone financial statements going forward on the same accounting basis and elections the Tax Group had been applying. It must also adopt the values of the relevant assets and liabilities exactly as they were recorded by the Tax Group, treating those figures as the opening values in its own standalone statements. This obligation continues indefinitely for Corporate Tax purposes, even though the member is no longer part of the group, and even if the applicable accounting standards would not normally permit using those values. In that situation, the former member simply calculates its taxable income as if the standards had allowed it.

The worked example in the Corporate Tax Publications makes this concrete. Company A transfers an asset with a book value of AED 100 to Company B for AED 120. Company A's standalone accounts show a gain of AED 20, and Company B records the asset at AED 120, but on aggregation that gain is eliminated and the Tax Group carries the asset at AED 100. From that point, the group depreciates the asset based on AED 100 rather than AED 120, even though Company B's own books keep depreciating from the higher figure. When Company B eventually leaves the group, its net book value for accounting purposes is AED 120, but for Corporate Tax purposes it has to carry the asset at the AED 100 tax value the group had been using, which becomes highly relevant the moment the asset is sold or otherwise disposed of.

There is a further wrinkle worth flagging for anyone tracking intragroup transfers. Under Article 42(9) of the Corporate Tax Law, if either party to an eliminated transaction leaves the Tax Group within two years of the transfer, the previously eliminated gain is clawed back into the group's taxable income on the date the member leaves, unless the related income would otherwise have been exempt. The member that departs then gets a corresponding adjustment to the cost base of the asset in its own standalone statements, so in the earlier example, if Company B had left within two years of the transfer, the AED 20 gain would be taxed at that point, and Company B's opening value for the asset would revert to AED 120 rather than AED 100.

Company A to Company B, asset transfer, accounting versus tax values

Practical takeaways for finance and tax teams

The Corporate Tax Publications are detailed, but the operational message is fairly straightforward once the mechanics are clear.

***Action checklist** - Build the aggregation working papers as a recurring exercise, not a scramble at return filing time. Line by line aggregation with specific eliminations is far easier to maintain when it is updated alongside each member's standalone close. - Agree accounting policies across the group before year end. Since uniform policies are a hard requirement, waiting until the aggregation stage to discover a subsidiary follows a different depreciation or revenue recognition policy creates avoidable rework. - Keep a clear tax basis register for any asset or liability transferred between group members. The elimination of intragroup gains changes carrying values for tax purposes only, and that gap needs to be tracked separately from the accounting records, particularly given the two-year clawback window under Article 42(9). - Plan for audit earlier than you might expect. With Ministerial Decision No. 84 of 2025 extending the audit requirement to every Tax Group for Tax Periods from 1 January 2025, revenue size is no longer a reason to assume an audit will not be needed. - Treat a member's exit as a distinct compliance event. The obligation to carry forward the group's accounting basis and asset values does not end when the member leaves, and getting this wrong at exit can distort taxable income for years afterward."

How CLA can help

Getting the aggregation mechanics right the first time, rather than unpicking them at filing deadline, is where an experienced adviser earns their keep. CLA works with Tax Groups across the UAE to make the Aggregated Financial Statements process a routine part of the financial close rather than a once-a-year scramble.

***Where CLA adds value** - Building and maintaining the aggregation working file, including the line-by-line eliminations and the IFRS 3 and IFRS 10 adjustments, alongside each member's standalone close. - Reviewing accounting policies across group members before year end so uniform policies are already in place when the aggregation is prepared. - Setting up and maintaining a tax basis register for intragroup asset and liability transfers, so the two-year clawback window under Article 42(9) is tracked automatically rather than discovered at exit. - Coordinating the special purpose audit of the Aggregated Financial Statements, including audit ready documentation and liaison with the auditor based on preparation. - Advising on the accounting and tax basis implications when a member joins or leaves a Tax Group, so opening values and taxable income are calculated correctly from day one."

Conclusion

Aggregated Financial Statements are best understood as a translation exercise. A Tax Group takes numbers that were prepared for shareholders, lenders, or regulators under IFRS, and restates them into a single tax specific view built strictly from the ground up, member by member, with only the eliminations the Corporate Tax Law and the Ministerial Decisions actually call for. Nothing more is stripped out, and nothing less. Where a group has already invested in a strong IFRS consolidation process, that discipline transfers well, but it does not replace the separate exercise the Corporate Tax Publications describe.

The direction of travel is also worth noting. The audit net has widened from a revenue threshold that once exempted smaller groups to a blanket requirement covering every Tax Group from 1 January 2025 onward, and the FTA has been specific enough, down to a template auditor's report and a model basis of preparation note, that there is little excuse for treating the requirement as a grey area. Groups that build the aggregation and audit trail into their normal financial close, rather than reconstructing it once a year under deadline pressure, will find the annual filing far less disruptive.

***In short** - Aggregated Financial Statements are built from standalone, not consolidated, financial statements. - IFRS 3 and IFRS 10 business combination effects are stripped out, along with related goodwill and fair value adjustments. - Every Tax Group needs an audit of its Aggregated Financial Statements for Tax Periods from 1 January 2025, regardless of revenue. - A member that leaves the group must keep using the group's accounting basis and asset values going forward, and a two-year clawback applies to intragroup transfers."

This article summarises the Federal Tax Authority Corporate Tax Publications of 27 August 2025 for general information purposes. It is not tax or legal advice and should not be relied upon as a substitute for a review of the underlying legislation or professional advice tailored to a specific Tax Group’s fact.